I think it is working, but the paragraphs aren’t styled like other paragraphs (I guess unintentionally).
-
View>Toggle Developer Tools. - Click the arrow-in-a-box icon at the top-left of that sidebar.
- Hover/click
bim— it’s marked up as a paragraph.
EDIT: I think it’s a theme problem — the paragraphs render correctly in the Help vault (in Obsidian 13.23 — I haven’t updated to the recent 13.30 versions). In the California Coast theme that I use, they have no space between them.